Salz Review - Wall Street Journal

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51 Salz Review An Independent Review of Barclays’ Business Practices make use of complex models to determine capital but this seems to have been another area that contributed to some strain in the relationship between Barclays and the FSA.
Salz Review An Independent Review of Barclays’ Business Practices 52 6. Conduct Matters 6.1 Our Terms of Reference require us to frame our recommendations around an analysis of past events where the bank’s conduct had a negative impact on its reputation. Most of these events began well before the 2008 financial crisis but only came to a head after the crisis began. Some are still subject to regulatory investigation, while others such as LIBOR involve legal actions. Some have already resulted in financial penalties. Others such as PPI have resulted in continuing compensation payments to customers. In all cases there has been damage to Barclays' reputation and we have sought to understand the reasons for the inappropriate conduct. This Review is, however, not a forensic investigation into these events and we have not examined those areas which are subject to continuing investigations or legal actions. 6.2 In this section, we begin by looking at the increasing attention paid by UK regulators to conduct matters, and the increasing scale of the penalties imposed for conduct failures by the UK and US regulators. We then analyse the specific events in the following groups: ― Regulatory penalties for conduct failures; ― Sanctions; ― Products and advice; ― Operational failures; ― Treatment of customers; ― Inappropriate behaviour – the LIBOR scandal. Regulatory Penalties for Conduct Failures 6.3 In the UK, the FSA has made enforcement actions backed by financial penalties a key plank of its approach to regulation since it was set up in December 2001 under the Financial Services and Markets Act 2000. The total value of fines imposed by the FSA on all financial services businesses between 2002 and 2008 fluctuated in a fairly narrow band of £5 million to £25 million a year. But in 2009, the quantum of fines began to increase substantially, reaching £89 million in 2010 and £312 million in 2012 – despite a much smaller increase in the number of fines (see Figure 6.1).
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Salz Review - April 2013
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Salz Review - Wall Street Journal

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